Columns / Discourse / February 20, 2013

Minimum wage increase: Say goodbye to small entrepreneurs

Our country has an income issue. The median income has been declining for the last 12 years. Some states are beginning to address the issue. Illinois is one of them.

The Illinois State Legislature will debate whether or not to increase the minimum wage to $10 an hour. It’s a significant increase from $8.25. It would be a dollar higher than what President Obama requested from Congress in the last State of the Union address.

As good as it would be for those of us who work at Knox, it’s not worth the sacrifice. Yes that means a bigger paycheck, but it also means harder times for small businesses and institutions like Knox that really can’t afford higher wages.

Knox College is a great example. The looming deficit crisis means that the institution requires more revenue, and increasing the minimum wage will affect their number of available student jobs. It makes sense. A higher minimum wage means less money for small institutions like Knox.

But this is also bad news for small businesses. One of those is the Broadview, right here in town.

The business is barely making it. Today’s economic situation is nowhere near ideal. The owner couldn’t have said any better herself. Diana Pacheco, 65, said that the “[Illinois State Legislature] is talking about minimum wage and if it goes up, I’m not too sure I can survive another raise.”

This isn’t just any kind of raise, but a hefty one. If the legislature approves the wage increase, Illinois will have the highest minimum wage in the Union. This isn’t something to be proud of, and certainly something that should cause some serious concerns to business owners like Pacheco and to small liberal arts colleges like Knox.

The only people that will benefit from this are big businesses and wealthy institutions. It’s businesses like Wal-Mart, fast food chains like McDonald’s and billion dollar revenue schools like Grinnell that will be benefitting. They, at least, can afford paying a higher minimum wage. This will slow down competition and force businesses like the Broadview to close and ultimately shrink endowments from small institutions. That’s not something that the State of  Illinois should strive toward.

Illinois should foster economic growth by loosening regulations and cutting taxes. Illinois isn’t one of the most outgoing states for no reason. Just take a second and think of your friends that graduated from Knox who decided to stay in the Land of Lincoln. It’s not a large number. There are only a few that make that decision.

Students that graduate from Illinois colleges are more likely to leave the state because of the crude economic situation.

Now, don’t get me wrong, mediocre wages are significant. The government should address this problem but not by mandating more expensive wages. Wages will improve if Illinois would once and for all create jobs through the private sector. Increasing the minimum wage is pathetically political rather than economic, and it really doesn’t fix our decrepit medium wages. It’s an issue that often leads to political games instead of actual solutions to economic recessions. It’s a purely political gimmick rather than a saving plea for the poor. A higher minimum wage means higher inflation and higher costs at the grocery store. Not good.

Illinois should get a hold of itself. The state should incentivize companies and institutions to grow. The state should not augment costs.

Alex Uzarowicz
Alex Uzarowicz has been a weekly conservative political columnist for The Knox Student for three years. He also writes for The College Conservative. Alex will graduate in June 2013 with a degree in political science, after which he will head abroad to begin his Peace Corps service.

Tags:  consumer spending growth hiring Illinois increase low-income Medicaid minimum wage policy small business

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1 Comment

Feb 21, 2013

There are more efficient market-based approaches to put money in the hands of the poor (earned income tax credit, increased direct transfers to the poor). (also of note, Republicans do not support these policies). Why not advocate for something like that? Or do you have other ideas you don’t mention here?

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